Good Strategy Bad Strategy: The Difference and Why It Matters by Richard Rumelt

What counts as good strategy

A good strategy answers three questions: What problem blocks us? Which approach will crack it? Which actions lock in the win? That is the kernel—diagnosis, guiding policy, coherent actions. Everything else is trimmed; resources home in on a single leverage point.

What counts as bad strategy

Bad strategy is easy to spot:

• a flood of words, a trickle of meaning;
• goals listed, but the obstacle unnamed;
• wish‑numbers instead of concrete moves;
• metrics vague or unreachable. Result: energy scattered, teams stuck.

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“Good strategy works by focusing energy and resources on one, or a very few, pivotal objectives whose accomplishment will lead to a cascade of favorable outcomes.”

— Richard Rumelt

7 takeaways from the book

1. Strategy starts with the problem
   Until the core obstacle is named, any “goal” floats in thin air.
   Example: In the 1990s Microsoft zeroed in on the Netscape threat—and Internet Explorer was born.
2. The kernel: Diagnosis — Policy — Actions
   Diagnosis sets the attack point; policy gives focus; coherent steps strike the same spot.
3. Focus beats diversification
   Spreading resources kills leverage. In 1997 Apple axed 70 % of its lineup, leaving just four flagship products.
4. “Verbiage foam” flags weak strategy
   The more slogans about “ecosystems and innovation,” the less grasp of reality.
5. Leverage: fix the chokepoint, not a thousand nips and tucks
   Southwest trimmed gate‑turnaround time and won on ticket price.
6. A near‑term goal charges motivation
   Break the climb into visible ridges: each summit shows progress, keeps morale alive.
7. Saying “no” is a leadership skill
   Strategy is the art of choosing one powerful line and dropping the rest.

“A good strategy clarifies and simplifies; a bad one hides the problem beneath a pile of platitudes.” — Richard Rumelt

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Quick check: are we sliding into bad strategy?

1. Clear diagnosis?
   If the specific problem is fuzzy, warning lights flash.
2. Do we know what we will NOT do?
   No refusals = no focus.
3. Fit on one page?
   Extra paragraphs often mask blurry thinking.
4. First step starts this afternoon?
   If action can’t begin today, it’s probably a wish plan.

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How to put it to work

• State the problem in one plain sentence—no buzzwords.
• Pinpoint where effort ×5 yields payoff ×50.
• Write 3‑5 mutually reinforcing actions.
• Before adding a task, ask: “Does it feed the kernel or distract?”
• Re‑read the diagnosis each quarter; if the problem shifts, so must the strategy.